Pennon Group's annual pre-tax profits rise marginally

Water utility Pennon Group reported a slight rise in full year pre-tax profit as a strong performance in its energy recovery business offset lower water prices.

Pre-tax profit rose 0.3% to £211.3m for the year to March 31 from £210.7m a year earlier. Group earnings before interest, tax, depreciation and amortisation increased 9.1% to £448.4m.

Revenue, however, dropped 0.4% to £1.35bn as the water regulator enforced a decrease in bills.

In an effort to address the new regulations, Pennon said it has cost savings and synergy plans underway to deliver £11m a year of financial benefits by 2017/18.

The water business's underlying profit before tax was marginally down by 1.3% to £165.7m reflecting South West Water's revenue reset, largely offset by the additional earnings from newly acquired Bournemouth Water, good cost control and lower average borrowing rates.

Viridor - the group’s energy recovery, recycling and waste management company - saw adjusted earnings before interest, tax, depreciate and amortisation increase 30.5% to £176.5m, driven by the full year effect of its expanded fleet of energy recovery facilities.

The group dividend was lifted 5.6% to 33.58p.

Shares rose 3.39% to 870p at 1039 BST.